Mortgage and renting my house

Nicolam56

Hi I own a house with my husband and we split up 2 years ago ,he moved out and I paid the mortgage,after a few months I was uncomftable living in the house I shared with my husband,I didn't have the money to sell it so I rented it out and I rented a place with my 3 children,I have always worked but the last 5 weeks I can't find work as my contract ended in my last job,I went to the social and they have said because I own a property I can't claim anything,it's classed as an income,I get 525 pound a month from my tenants and my rent is 550,I am also paying 300 a month mortgage,I have been told by my mortgage company that my ex husband has to pay a solicitor to have my name taken off,he said he hasn't got the money to do it,he probably has but he won't help me,is there any other way I can do this without it costing me,

Fire_Fox

Welcome! It's worth running an advanced search there are many threads on this. Do you have consent to lease from your lender and are you both paying income tax on the profits of the rent? Are you claiming contributions based Jobseekers Allowance at least?

Is there any equity in the property, if so is there any reason you are not selling? You don't need any money for this, the costs are all paid out of the profits from the sale. You would need to check the Benefits board but I think if the place is on the market the value can be disregarded for a time. You may need to serve your tenants notice to quit if they are not in the fixed term of their AST. If they are not in the fixed term have you lodged their deposit with one of the three schemes?

00ec25

its not only classed as an income but its taxable too
do you understand how the tax on rental income works becuase with 525 coming in and only a small mortgage you are already potentially in a positiion where you owe tax on the rental profit given that you have not been out of work for long enough yet that your taxable income is less than your annual income tax free allowance of £8,105

BTW as i assume you are not yet divorced then legally speaking your ex still owns a share of the property and that % of the rental income belongs to him, not to you, certainly he is liable for the tax on that share

I think you have a lot of things to sort out you may not yet be aware of ...

Nicolam56

I am renting privately as my mortgage would have gone up 235 pound a month because I was renting it out,I'm not sure about tax,I pay buildings insurance and my rent,there is no equity on it I just want to leave it for my kids

Caz3121

Nicolam56 wrote: »

Hi I own a house with my husband and we split up 2 years ago ,he moved out and I paid the mortgage,after a few months I was uncomftable living in the house I shared with my husband,I didn't have the money to sell it so I rented it out and I rented a place with my 3 children,I have always worked but the last 5 weeks I can't find work as my contract ended in my last job,I went to the social and they have said because I own a property I can't claim anything,it's classed as an income,I get 525 pound a month from my tenants and my rent is 550,I am also paying 300 a month mortgage,I have been told by my mortgage company that my ex husband has to pay a solicitor to have my name taken off,he said he hasn't got the money to do it,he probably has but he won't help me,is there any other way I can do this without it costing me,

If you jointly own the property both you and your husband would be liable to declare the income less mortgage interest and letting expenses to the tax man.
If you do not have permission from the mortgage company then you are likely breaching the terms of your mortgage and they could call the whole loan in.
You are a landlord even if renting privately and as such you need specialist landlord insurance, gas safety checks etc
If there is no equity and your ex cannot afford a solicitor it is unlikely he would be able to get a mortgage in his own name alone for the property.
Sell up

Thrugelmir

Nicolam56 wrote: »

I am renting privately as my mortgage would have gone up 235 pound a month because I was renting it out,

If you are in breach of mortgage terms then you are in danger of seriously impacting your credit rating.

Your insurance is invalid should you make a claim if lenders permission has not been sought.

Fire_Fox

Nicolam56 wrote: »

I am renting privately as my mortgage would have gone up 235 pound a month because I was renting it out,I'm not sure about tax,I pay buildings insurance and my rent,there is no equity on it I just want to leave it for my kids

Woah back up there! Renting privately doesn't matter, you are a landlord you need to comply with all the legislation and your lenders rules.

- Do you have consent to lease from your lender? This is not the same as a BTL mortgage
- Is the tenants' damage deposit lodged with one of the three schemes?
- Do you have a landlord's gas safety certificate if there is gas in the property?
- You must BOTH register for and pay income tax on ALL the profit (you cannot write off your own rent!). If you do not this is tax evasion which is a criminal offence
- Do you have landlord's insurance?

That is just for starters, there are many more pieces of legislation you must comply with. If you cannot afford to do things by the book you must sell the property, it is totally unfair on your tenants to be a shyster landlord. You could also very easily end up in court! :eek:

theartfullodger

Nicolam56 wrote: »

t,I'm not sure about tax...... I just want to leave it for my kids

I could leave a lot more to my kids if I didn't bother paying tax .. well, until taxman found out &fined me ...

Contact HMRC quick, tell them what's been going on & they might be lenient... don't know about tax? Sorry doesn't sound probable...

Nicolam56

Ohhh noo,I didnt know I needed to pay tax on it I thought my mortgage was enough

dacouch

Thrugelmir wrote: »

If you are in breach of mortgage terms then you are in danger of seriously impacting your credit rating.

Your insurance is invalid should you make a claim if lenders permission has not been sought.

If you have a Landlords Insurance Policy then the chances of your Insurance being invalid due to you not having Lenders Permission is negligible. It goes against a basic principle of Insurance.

Fire_Fox

Nicolam56 wrote: »

Ohhh noo,I didnt know I needed to pay tax on it I thought my mortgage was enough

Your mortgage is only part of the income? Do you have the other stuff I mentioned sorted?

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10013435
http://www.hmrc.gov.uk/agents/toolkits/property-rental.pdf